Companies have more flexibility in testing for impairment of goodwill now, thanks to recent changes in accounting standards that permit the use of a qualitative assessment to determine if additional tests are needed. Under new guidance developed by the FASB and introduced in ASU 2011-08, a qualitative assessment can save companies the time and expense of a formal business valuation. But this technique may not be as simple as it sounds, especially in a changing or uncertain business environment. It requires a careful analysis of all the relevant data, including any changes in overall market trends and any changes in the key value drivers of a company’s reporting units.

1. February 2012
MHMMessenger
M AY E R H O F F M A N M C C A N N P. C . – A N I N D E P E N D E N T C PA F I R M
A publication of the Professional Standards Group
Qualitative Tests for Impairment of Goodwill
Companies have more flexibility in testing for To help companies apply the new guidance, MHM’s
impairment of goodwill now, thanks to recent changes Professional Standards Group has compiled an
in accounting standards that permit the use of a Executive Briefing. The contents include the following:
qualitative assessment to determine if additional tests
are needed. • Overview of qualitative assessments
Under new guidance developed by the FASB and • Q&As about testing goodwill for impairment
introduced in ASU 2011-08, a qualitative assessment
can save companies the time and expense of a formal • An illustrative case study
business valuation. But this technique may not be
as simple as it sounds, especially in a changing or If you would like additional information about the case
uncertain business environment. It requires a careful study and supporting worksheets, or if you have any
analysis of all the relevant data, including any changes specific questions, comments or concerns about the
in overall market trends and any changes in the key new qualitative assessments, please contact Keith
value drivers of a company’s reporting units. Peterka of MHM’s Professional Standards Group
or your MHM service professional. You can reach
Keith directly by email at kpeterka@cbiz.com and by
telephone at 610-862-2744.
The information in this MHM Messenger is a brief summary and may not include all the details relevant to your situation.
Please contact your MHM service provider to further discuss the impact on your financial statements.
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